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LR2 Switchover Update

May 31, 2024

LR2 switchovers play an important role in tonnage supply, as both Aframax and LR2 fleet sizes are directly impacted by these activities.  Tracking by our proprietary commercial database, we have identified a net increase of 51 LR2s joined the dirty-trading market from Sep 2022 to Dec 2023, in line with the huge earning advantage of dirty-Aframaxes amid the Russian sanction impact.  The surged conventional crude tanker demand in the Atlantic Basin as well as new demand to export Russian crude from Western ports to Asia have pushed the average earnings for the Aframax AG>Singapore to US $60,600/day ...

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New Refineries in West Africa

May 17, 2024

The continued refinery ramp-up in West Africa (mainly Dangote) has started to impact tanker demand and created new trade lanes in the Atlantic Basin.  According to S&P Global, the Dangote refinery has secured crude supply at only 300k b/d of the max capacity at 650k b/d from the Nigeria’s national oil company NNPC, which lead us to believe the gap will be fulfilled by other light grades including imports from the US.  Since the beginning of this year, we have captured four VLCCs and one Suezmax have been sailed/booked to import US crude to Dangote ...

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Trans Mountain Pipeline Aframax Lightering Analysis

May 3, 2024

Earlier this week, Reliance Industries purchased 2 million barrels of Canadian crude from Shell for July delivery.  This marks the Indian refiner’s first oil purchase from the Trans Mountain pipeline.  Shell will perform ship-to-ship (STS) transfers to move approximately four 500,000-barrel cargoes of Access Western Blend (AWB) onto a VLCC for final discharge to the Sikka port, where Reliance operates the world’s largest refining complex.  The 2-million-barrel stem is reported to be $6/bbl less than ICE Brent for September.  Therefore, we estimate the crude is sold at ~$80/bbl on the delivered basis as ICE Brent ...

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Kirkuk-Ceyhan Pipeline Update

April 26, 2024

The month of March marked as the 1st full year since 400k b/d of the overall capacity for the KRG pipeline was halted, a pipeline which once handled about 0.5% of global crude supply.  This pipeline flows from Northern Iraq to the Turkish port of Ceyhan.  Political tensions between the Iraqi government, the autonomous Kurdistan Government (KRG) and Turkey have curtailed the ability to formulate an immediate solution to bring back the throughput, a perfect bypass of not only the Red Sea but also the Hormuz Strait and the Suez Canal.  

 

However, the Iraqi government is planning to ...

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Sanctioned Russian Fleet Impact

April 5, 2024

As the US tightened sanctions enforcement, major refineries in India announced they have stopped buying Russian crude carried by the Russian fleet mainly owned by Sovcomflot, a trend likely to expand to buyers in the Far East.  Two scenarios could emerge when Asian buyers walk away from Russian oil and/or Russian ships: 1) an increase of “shadow” Aframax fleet for Russia > India+China demand if crude exports remain at similar level (or possibly higher due to drone strikes taking out refinery capacity); 2) a substitute of Russian crude with imports from the Middle East and US Gulf by conventional ...

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